Smartphones to get cheaper and cheaper

As the smartphone juggernaut rumbles on, vendors are increasingly turning their efforts to emerging markets, with less disposable income and a much lower smartphone penetration rate.

As smartphones are projected to outsell feature phones this year, the need for inexpensive smartphone designs is greater than ever and ABI Research reckons it will continue to grow.

ABI Research divides the smartphone market into three price brackets, low-cost smartphones priced at up to $250, mid range models in the sub-$400 price range and high-end devices, priced at $400+. Shipments of low-cost phones are expected to grow from 259 million this year to 788 million in 2018. Sales of high-end and mid-range phones are forecast to grow from 635 million to 925 million.

It is clear that there is a lot more room for growth in the low-end, and to some extent the mid-range. ABI Research estimates that low-cost units will account for 46 percent of all smartphone shipments by 2018, up from 28 percent last year.

Although most growth is expected in emerging markets, it is very likely that western consumers will change their habits as well. As smartphones mature it will become increasingly difficult to come up with very innovative designs and the lukewarm response to the Samsung Galaxy S4 and iPhone 5 might be a sign of things to come.

“As smartphone penetration moves from early adopters to mass-market and laggard consumer segments, the smartphone as a product will be less dependent on technical superiority, and more dependent on reliability and value,” said senior practice director, Jeff Orr.

Low-cost smartphones are expected to do exceptionally well in underdeveloped markets, with plenty of pre-paid users and very little in the way of subsidies. However, they could also play a role in developed markets, helping feature phone consumers convert to smartphones at a fraction of the cost of high-end gear.